Economists may have different views about the seriousness of deficits. Keynesian economists like Nobelist Paul Krugman argue that governments are not meant to be run as businesses and a certain amount of deficit spending is necessary to solve big structural problems that only a government can. Right-leaning economists consider “deficit” a dirty word and their mantra that government should be run like a business has been a soundbite effectively deployed by Republican candidates at both the state and federal level.
This has led to a persistent belief that Democrats are irresponsible spenders whereas Republicans are the party of fiscal responsibility. It is a myth that refuses to die even when confronted with data that shows the exact opposite. Democratic Presidents (Clinton, Obama) have made much more inroads into the deficit than big spenders like Reagan, Bush, and Trump.
In the past few years, the annual deficit has ballooned to around $3 trillion due to pandemic spending and loss of revenue. In 2017, Republicans ushered in a massive tax-cut bill under former President Donald Trump that by some estimates has added more than $1 trillion to the debt.
Now comes the news that the deficit is dropping under President Biden too.
Biden noted that the budget deficit fell by more than $350 billion in his first year and that new U.S. Treasury estimates showed it would fall by more than $1.5 trillion this year – the largest deficit reduction in a single year on record and a revision up from the $1.3 trillion projected in the president's budget released earlier this year, the official said.
The math is simple. Republicans balloon the deficit by giving tax cuts to the rich and then use that as an excuse to drastically cut government spending and defund government departments (especially the IRS, so their cronies can get away with tax evasion) and then run on a campaign of bringing fiscal oversight. It’s a neat trick, akin to an arsonist pledging to fight fire more effectively!
Meanwhile, Democratic policies have led to better economic growth, broader economic gains for the poor and the middle class, and better outcomes on deficits and debt.
Next time you hear Republican messaging on deficits and debt, have a hearty chuckle and vote blue!